Wyndham International's bank debt traded up eight points last week on a rumored amendment that would secure the bank debt with the company's hotel mortgages. There have been no official statements from the company, but dealers speculate the amendment will come into play early next month. About $10 million of the "B" paper traded at 89 last week, while the increasing-rate loan was quoted at 851/ 2-86. Goldman Sachs was rumored to be active in the credit, but officials there declined to comment.
Calls to Rick Smith, cfo of the Texas-based hotel chain, were not returned. Spokesman Andrew Jordan, referred to prior announcements that the company has a waiver for its third and fourth quarters. "We have to have a permanent amendment by the end of February," he said, declining to elaborate on the specifics of that amendment.
By gaining the mortgages as collateral, holders of the bank debt could take possession of the company's properties. While a dealer joked that owning a hotel is not necessarily in a bank's interest, "The other possibility is declaring default or bankruptcy." The deal had been already secured by stocks, and dealers said the additional collateral demonstrates that the company needs to make concessions for not being in compliance with its covenants. "The banks aren't going to go naked," a trader said.
Wyndham International's debt is not rated, but in late September both Moody's Investors Service and Standard & Poor's put a slew of hotel credits on negative watch.